1031 Exchange Services
The term "sale and lease back" describes a scenario in which a person, normally a corporation, owning company residential or commercial property, either genuine or personal, sells their residential or commercial property with the understanding that the buyer of the residential or commercial property will immediately reverse and rent the residential or commercial property back to the seller. The objective of this kind of transaction is to enable the seller to rid himself of a big non-liquid investment without depriving himself of the usage (during the term of the lease) of needed or desirable structures or devices, while making the net cash proceeds offered for other investments without turning to increased financial obligation. A sale-leaseback transaction has the additional advantage of increasing the taxpayers offered tax deductions, due to the fact that the rentals paid are normally set at 100 per cent of the worth of the residential or commercial property plus interest over the regard to the payments, which results in a permissible deduction for the value of land as well as structures over a period which might be much shorter than the life of the residential or commercial property and in certain cases, a reduction of an ordinary loss on the sale of the residential or commercial property.
What is a tax-deferred exchange?
A tax-deferred exchange enables an Investor to offer his existing residential or commercial property (relinquished residential or commercial property) and purchase more successful and/or efficient residential or commercial property (like-kind replacement residential or commercial property) while postponing Federal, and in many cases state, capital gain and depreciation recapture income tax liabilities.
The term "sale and lease back" describes a scenario in which a person, normally a corporation, owning company residential or commercial property, either genuine or personal, sells their residential or commercial property with the understanding that the buyer of the residential or commercial property will immediately reverse and rent the residential or commercial property back to the seller. The objective of this kind of transaction is to enable the seller to rid himself of a big non-liquid investment without depriving himself of the usage (during the term of the lease) of needed or desirable structures or devices, while making the net cash proceeds offered for other investments without turning to increased financial obligation. A sale-leaseback transaction has the additional advantage of increasing the taxpayers offered tax deductions, due to the fact that the rentals paid are normally set at 100 per cent of the worth of the residential or commercial property plus interest over the regard to the payments, which results in a permissible deduction for the value of land as well as structures over a period which might be much shorter than the life of the residential or commercial property and in certain cases, a reduction of an ordinary loss on the sale of the residential or commercial property.
What is a tax-deferred exchange?
A tax-deferred exchange enables an Investor to offer his existing residential or commercial property (relinquished residential or commercial property) and purchase more successful and/or efficient residential or commercial property (like-kind replacement residential or commercial property) while postponing Federal, and in many cases state, capital gain and depreciation recapture income tax liabilities.